New data released July 16th by the Federal Reserve finds U.S. industrial production was flat last month, with gains in manufacturing and mining compensating for a decline in utilities.
The Federal Reserve’s latest release on U.S. industrial production showed manufacturing output edged up 0.4%, following a 0.2% increase in May. Mining increased 0.2%, and utilities decreased 3.6%.
The Fed noted that the drop in utilities was largely due to cooler June temperatures reducing the demand for air conditioning.
Overall, manufacturing output has fallen at a 2.2% annual rate in the second quarter.
Auto Industry Leads Manufacturing Output Gains (Again)
June’s manufacturing output report follows a number of dreary manufacturing reports in recent months. The first half of 2019 has produced significantly lower output reading for manufacturing overall, while the ISM continues to report that manufacturing is expanding at a slower pace.
Manufacturing production’s 0.4% bump was led by a rise in motor vehicle production, which jumped 2.9% in June, following a 2.4% increase in May.
Motor vehicle production slowed in the first quarter of 2019, but now appears to be picking up.
Year-over-year, motor vehicle production has risen 2.4%, according to the Fed.
Related: A Closer Look at Growth in the U.S. Motor Vehicle Parts Industry
On a year-over-year basis, manufacturing output has risen 1.2%, measured from June 2018 to June 2019. Over the same time frame, mining has increased 7.2% and utilities 2.4%, for an overall industrial output increase of 2.1% over twelve months.
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Capacity Utilization Falls
The Fed reported a slight dip in the nation’s capacity utilization, which measures the extent to which industrial firms make use of their productive capacity.
Capacity utilization inched down 0.2% in June, following a 0.2% increase in May. Industrial companies are now utilizing at a rate of 77.9%.
This is 1.9% below its long-run average (1972-2018), the Fed noted.
Specific Industry Data
Taking a closer look at manufacturing output data, the Fed reports durable goods output rose 0.4% in June, while output in non-durable goods manufacturing rose 0.5%.
On a year-over-year basis, durable goods manufacturing was the clear winner, rising 1.4% since June of 2018. This is compared to non-durable goods output, which declined 0.5% over the same time frame.
In the durable goods category, motor vehicle parts led gains, up 2.9%. Other industries gaining ground included non-metallic mineral products, up 1.1%. Year-over-year durable goods gains were led by the computer and electronic products industry, up 5.3%.
For non-durable goods, the Fed reported an increase in petroleum and coal products output, up 2.5%, while textiles gained 0.8%; food, beverage & tobacco gained 0.7%; and plastics/rubber increased production by 0.6%.
Where is U.S. Manufacturing Headed?
As we head into the third quarter of 2019, the U.S. manufacturing sector continues to send mixed signals.
On one hand, the Institute for Supply Management’s barometer of industrial activity cooled to a three-year low.
The two consecutive quarters of manufacturing output declines in 2019 indicates the sector is losing momentum following one of the strongest manufacturing expansions in decades.
Related: U.S. Manufacturing Employment Rebounds. Here are the Month's Big Winners
On the other hand, a report from the U.S. Department of Labor, out July 5th, found the nation added 17,000 manufacturing jobs in June after several months of little to no increases.
And there’s been no shortage of manufacturing companies announcing new investments. IndustryNet recently took a look at some of the more notable new plant announcements this month. You can read about that here.
The White House just this week revamped the Buy American Act, unveiling a new plan to boost federal procurement of U.S.-manufactured products. That may serve to bolster manufacturing production.
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